Stocks Trading Near 52-Week Lows to Buy Right Now

Posted On October 18, 2018 3:07 pm

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Even after the most recent sell-off, the stock market is still in the black for 2018. The S&P 500 is still up 2.9% for the year, and its cyclically adjusted price-to-earnings ratio is still high at 31 times. Not all stocks move in unison, though, and several companies are now trading their lowest levels over the past year. For investors looking to take advantage of the short-term thinking of the market, the occasional great company can be found on the 52-week low list.

Today, three that stick out as great companies to own for the long term but are trading at or near their 52-week lows are homebuilder LGI Homes (NASDAQ:LGIH), oil services provider and equipment manufacturer Schlumberger (NYSE:SLB), and water heater manufacturer A.O. Smith (NYSE:AOS). Here’s a look at why their stocks are cheap and why you might want to consider buying them now.

Tailored to handle today’s housing market

One of the most considerable constraints on the housing market today isn’t a lack of buyers — it’s a lack of affordability. Just about any story these days about a slowing housing market involves the lack of affordable housing and rising interest rates taking prospective buyers out of the market. News like that should make a homebuilder investor nervous, but that may not necessarily be the case with LGI Homes.

Instead of trying to build homes across the primary housing categories — first-time buyers, move up, luxury, and active adult communities — LGI focuses its efforts entirely on the first-time buyer market with both its approach to homebuilding and marketing. It focuses on developing land outside, but access to, major metro areas; it has fewer home designs in its portfolio and a more cookie-cutter approach to each home to cut down on construction costs; and it prices its houses in various markets such that mortgage payments are on par with rental rates, encouraging renters to build equity. At the end of the most recent quarter, the average selling price for LGI was in the $225,000 to $235,000 range. While that may not be an affordable price for everyone on the market, it is almost $100,000 less than the average selling price for most of its homebuilding peers and makes its home much more accessible than others.

LGI Homes recently noted that…
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